Attachment to ideas is prevalent across all investments, but no more so than when it comes to gold. Just mention the yellow metal and the opinions begin flying. Believers, most commonly referred to as “gold bugs”, stress that over the centuries gold has served as a store of wealth, is “true” money, and that over time the experiment in

Investor psychology is fascinating. Studies have shown that when faced with an impersonal decision such as picking investment A or investment B, people usually act in a rational manner. However, when an emotional attachment is involved, we are much more vested. Whether it be a person unwilling to sell a stock inherited from grandparents, or someone who tends to view a stock through a certain prism because he loves the product (examples include companies like Amazon.com (NASDAQ:AMZN) and Apple (NASDAQ:AAPL) whose users are extremely loyal), set beliefs are difficult to overcome.

Attachment to ideas is prevalent across all investments, but no more so than when it comes to gold. Just mention the yellow metal and the opinions begin flying. Believers, most commonly referred to as “gold bugs”, stress that over the centuries gold has served as a store of wealth, is “true” money, and that over time the experiment in

Complete Story »]]>
GLDIAUSean HannonRiding the Bullhttp://seekingalpha.com/article/245201-riding-the-bull?source=feed_author_sean_hannon
245201
Given a choice between boring predictability and excitement, I seek the former. Unexpected news flashes that cause leaps in stock prices quicken the pulse, but I am not seeking an adrenaline rush. My goal is to deliver tremendous gains by routinely compounding profits. Repeat this process often enough and your portfolio prospers.

With a penchant for predictability, I enjoy Januarys. I do not possess a crystal ball that sees the future, but I am fairly certain of a topic which will soon crowd the investment airways—the January effect.

Many investors hold one of two main beliefs regarding the significance of the month of January. One theory holds that as January goes, so goes the entire year. For these believers, the road to February will be a long one, marked with earnings reports and economic announcements.

A second camp holds that if the first five trading days of a given year

Given a choice between boring predictability and excitement, I seek the former. Unexpected news flashes that cause leaps in stock prices quicken the pulse, but I am not seeking an adrenaline rush. My goal is to deliver tremendous gains by routinely compounding profits. Repeat this process often enough and your portfolio prospers.

With a penchant for predictability, I enjoy Januarys. I do not possess a crystal ball that sees the future, but I am fairly certain of a topic which will soon crowd the investment airways—the January effect.

Many investors hold one of two main beliefs regarding the significance of the month of January. One theory holds that as January goes, so goes the entire year. For these believers, the road to February will be a long one, marked with earnings reports and economic announcements.

A second camp holds that if the first five trading days of a given year

Complete Story »]]>
Sean HannonFive Predictions and Four Potential Surprises for 2011http://seekingalpha.com/article/244544-five-predictions-and-four-potential-surprises-for-2011?source=feed_author_sean_hannon
244544
After reviewing my 2010 predictions, I now look ahead to 2011. For this article I will outline five predictions for the year ahead as well as four potential surprises that could debunk my theses. Doing so will allow the reader to consider both angles of the argument - a practice we should all adhere to as investors. As always, as my views change, I will update subscribers through the weekly newsletter, bonus articles and weekly commentaries. Even when we are adamant about future events, we must remain flexible and be prepared to alter our opinions when new information emerges.

My five key predictions are as follows:

Economic Surge - Parsing the economic news produces uncertainty. Employment and housing remain weak while other areas point to growth. Pushing the data through an econometric model, many expect a year of higher, but unspectacular growth. However, the stock market offers a

After reviewing my 2010 predictions, I now look ahead to 2011. For this article I will outline five predictions for the year ahead as well as four potential surprises that could debunk my theses. Doing so will allow the reader to consider both angles of the argument - a practice we should all adhere to as investors. As always, as my views change, I will update subscribers through the weekly newsletter, bonus articles and weekly commentaries. Even when we are adamant about future events, we must remain flexible and be prepared to alter our opinions when new information emerges.

My five key predictions are as follows:

Economic Surge - Parsing the economic news produces uncertainty. Employment and housing remain weak while other areas point to growth. Pushing the data through an econometric model, many expect a year of higher, but unspectacular growth. However, the stock market offers a

Complete Story »]]>
SPYDAXSean HannonWhy You Should Buy the Diphttp://seekingalpha.com/article/235568-why-you-should-buy-the-dip?source=feed_author_sean_hannon
235568
Memory is an amazing asset. Living in a digital-age where new information constantly erupts, we often rely upon past experiences to synthesize and react to the never ending data stream. Doing so allows us to pierce the clutter and intelligently make quick decisions.

A natural approach, is relying upon memory wise? It depends. If the tools (the events being recalled) we are using are correct, all is fine. However, recall an event incorrectly and errors compound. Examining the distinction between valid and misplaced memories, a 2006 study published in the Neuron Journal examined why some people remember more details of events than other people. The study found the brain does not use only one region to store memories, but must activate a particular brain area when the event occurs in order to help remember all the details of an event. As the study’s senior author Michael Rugg explains, “You can’t

Memory is an amazing asset. Living in a digital-age where new information constantly erupts, we often rely upon past experiences to synthesize and react to the never ending data stream. Doing so allows us to pierce the clutter and intelligently make quick decisions.

A natural approach, is relying upon memory wise? It depends. If the tools (the events being recalled) we are using are correct, all is fine. However, recall an event incorrectly and errors compound. Examining the distinction between valid and misplaced memories, a 2006 study published in the Neuron Journal examined why some people remember more details of events than other people. The study found the brain does not use only one region to store memories, but must activate a particular brain area when the event occurs in order to help remember all the details of an event. As the study’s senior author Michael Rugg explains, “You can’t

Complete Story »]]>
SPYDIAQQQSean HannonWhat Happens Next? Embracing the Bullhttp://seekingalpha.com/article/234819-what-happens-next-embracing-the-bull?source=feed_author_sean_hannon
234819
What happens next? A simple, yet important question, these three words occupy investors’ thoughts. Midway through a week which has seen the Republicans reclaim control of the House of Representatives (yet fail to take control of the Senate) and the Federal Reserve (Fed) unveil its intentions of pushing $600 billion into the financial markets, investors have seen stock prices rally an impressive 1.2%.

With such powerful catalysts having delivered profits, attention turns to the future. Do recent gains represent a peak that cannot be surmounted? Can momentum push prices perpetually higher? Is now the time to sell or is it better to increase our risk exposure?

All are important questions that can only be answered with the benefit of time. However, time we do not have. Academics can rely upon hindsight to validate ideas, but investors must act now and receive the consequences later.

What happens next? A simple, yet important question, these three words occupy investors’ thoughts. Midway through a week which has seen the Republicans reclaim control of the House of Representatives (yet fail to take control of the Senate) and the Federal Reserve (Fed) unveil its intentions of pushing $600 billion into the financial markets, investors have seen stock prices rally an impressive 1.2%.

With such powerful catalysts having delivered profits, attention turns to the future. Do recent gains represent a peak that cannot be surmounted? Can momentum push prices perpetually higher? Is now the time to sell or is it better to increase our risk exposure?

All are important questions that can only be answered with the benefit of time. However, time we do not have. Academics can rely upon hindsight to validate ideas, but investors must act now and receive the consequences later.

Although a perfect forecasting process does

Complete Story »]]>
SPYDIAQQQSean HannonExpecting Weakness: Why the Market's Sugar High Is About to Endhttp://seekingalpha.com/article/233884-expecting-weakness-why-the-markets-sugar-high-is-about-to-end?source=feed_author_sean_hannon
233884
With children changing into Halloween costumes and preparing to trick-or-treat, their chief concern is how much candy they can gather as quickly as possible. As parents prepare for the inevitable crash that accompanies every sugar-high, we hope the swings from giddiness to melodrama are brief and painless.

Investors are making similar preparations. With last week’s statistically insignificant, yet positive, close, the stock market continues pushing higher. Since August 23, the S&P 500 has rallied 11%. During this move, the index has closed higher eight of nine weeks and has yet to suffer a decline greater than 2%. Just as children will shovel candy into their mouths and enjoy instant satisfaction, investors who have bought every dip have done very well.

Those taking an unemotional view of the market logically question how long this pattern can continue. After all, with the markets overbought and in need of a pause, a quick

With children changing into Halloween costumes and preparing to trick-or-treat, their chief concern is how much candy they can gather as quickly as possible. As parents prepare for the inevitable crash that accompanies every sugar-high, we hope the swings from giddiness to melodrama are brief and painless.

Investors are making similar preparations. With last week’s statistically insignificant, yet positive, close, the stock market continues pushing higher. Since August 23, the S&P 500 has rallied 11%. During this move, the index has closed higher eight of nine weeks and has yet to suffer a decline greater than 2%. Just as children will shovel candy into their mouths and enjoy instant satisfaction, investors who have bought every dip have done very well.

Those taking an unemotional view of the market logically question how long this pattern can continue. After all, with the markets overbought and in need of a pause, a quick

Complete Story »]]>
SPYDIAQQQSean HannonEmployment Preview: When Will We See an Increase in Payrolls?http://seekingalpha.com/article/228789-employment-preview-when-will-we-see-an-increase-in-payrolls?source=feed_author_sean_hannon
228789

Wednesday morning’s ADP employment report begins a three day parade of jobs data. This morning’s announcement of 39,000 jobs being lost was well below forecast and highlights the lack of economic growth. As the next two days bring Thursday’s weekly employment data and finally Friday’s nonfarm payroll report which is expected to show payrolls unchanged and the unemployment rate increasing to 9.7%, the question remains if, and when, we will see an increase in payrolls.

Looking at Friday’s consensus estimate, I have always poked fun at the incessant need for Wall Street forecasters to narrowly attempt outguessing others. Believing that their number must be “right”, all efforts are directed toward building the perfect model that generates the precise answer. I find this effort wasted as the perfect forecast has little predictive value when determining where stock prices will travel. Regardless, the Street’s obsession continues. Therefore, when I see a number

Wednesday morning’s ADP employment report begins a three day parade of jobs data. This morning’s announcement of 39,000 jobs being lost was well below forecast and highlights the lack of economic growth. As the next two days bring Thursday’s weekly employment data and finally Friday’s nonfarm payroll report which is expected to show payrolls unchanged and the unemployment rate increasing to 9.7%, the question remains if, and when, we will see an increase in payrolls.

Looking at Friday’s consensus estimate, I have always poked fun at the incessant need for Wall Street forecasters to narrowly attempt outguessing others. Believing that their number must be “right”, all efforts are directed toward building the perfect model that generates the precise answer. I find this effort wasted as the perfect forecast has little predictive value when determining where stock prices will travel. Regardless, the Street’s obsession continues. Therefore, when I see a number

Complete Story »]]>
Sean HannonMarket Outlook: Expecting a Pullbackhttp://seekingalpha.com/article/228298-market-outlook-expecting-a-pullback?source=feed_author_sean_hannon
228298
My long-term view of the stock market is both consistent and clear. Believing that economic growth will remain low for many years, a protracted trading range will allow nimble traders to prosper as the buy-and-hold investor sees limited gains. Only buying when prices have fallen consistently, riding the eventual recovery higher and selling at the top of the trading range will allow investors to increase their wealth and improve their living standards.

As a vocal proponent of a long-term trading range, the investment approach is simple. Monitoring the tone of the market allows us to trade within set confines and register a series of small gains that compound into a large sum. Having executed this strategy in this newsletter, we have demonstrated that slow and steady wins the race.

From a publishing perspective, the trading range provides a challenge. Facing an environment where prices go higher one moment and lower

My long-term view of the stock market is both consistent and clear. Believing that economic growth will remain low for many years, a protracted trading range will allow nimble traders to prosper as the buy-and-hold investor sees limited gains. Only buying when prices have fallen consistently, riding the eventual recovery higher and selling at the top of the trading range will allow investors to increase their wealth and improve their living standards.

As a vocal proponent of a long-term trading range, the investment approach is simple. Monitoring the tone of the market allows us to trade within set confines and register a series of small gains that compound into a large sum. Having executed this strategy in this newsletter, we have demonstrated that slow and steady wins the race.

From a publishing perspective, the trading range provides a challenge. Facing an environment where prices go higher one moment and lower

Complete Story »]]>
SPYDIAQQQSean HannonWhere Is the Growth?http://seekingalpha.com/article/227269-where-is-the-growth?source=feed_author_sean_hannon
227269
With the benefit of 15 months of hindsight, we now know the Great Recession is officially over. When the National Bureau of Economic Research (NBER) declared the recession officially ended in June 2009, it reminded me of a constant annoyance. As the official arbiter of when recessions both begin and end, the NBER is given great latitude. Instead of deciding in real time, as all investors must, a group of economists make grand pronouncements about important events well after they have occurred. If only stock trading were that easy.

As easy as it is to mock the NBER’s timing, there is a more important consideration. History has taught us that recession leads to recovery. When the economy stops declining, it should begin growing. With this transition occurring, investors can make assessments of economic growth and the effect it will have on stock prices.

With the benefit of 15 months of hindsight, we now know the Great Recession is officially over. When the National Bureau of Economic Research (NBER) declared the recession officially ended in June 2009, it reminded me of a constant annoyance. As the official arbiter of when recessions both begin and end, the NBER is given great latitude. Instead of deciding in real time, as all investors must, a group of economists make grand pronouncements about important events well after they have occurred. If only stock trading were that easy.

As easy as it is to mock the NBER’s timing, there is a more important consideration. History has taught us that recession leads to recovery. When the economy stops declining, it should begin growing. With this transition occurring, investors can make assessments of economic growth and the effect it will have on stock prices.

Currently, the transition is unclear. Bulls will

Complete Story »]]>
Sean HannonStill Stuck in the Rangehttp://seekingalpha.com/article/225627-still-stuck-in-the-range?source=feed_author_sean_hannon
225627
Although my college studies focused on business and finance, I took as many history classes as I could. Some may have viewed these electives as unnecessary academic pleasures, but I felt they would provide perspective regardless of the career path taken. Believing that human nature rarely changes, looking at what once happened provides important clues as to what will come next. As Edmund Burke famously declared, “those who do not know history are destined to repeat it.”

Recent articles have taken a look at the past in order to discern the future. Two weeks ago the focus was on the economy and the odds of a double-dip recession. Despite the negative economic data and constant chatter over the possibility of another recession, historical data indicated the likelihood of such an event to be very low (a view the mainstream media is now recognizing).

Although my college studies focused on business and finance, I took as many history classes as I could. Some may have viewed these electives as unnecessary academic pleasures, but I felt they would provide perspective regardless of the career path taken. Believing that human nature rarely changes, looking at what once happened provides important clues as to what will come next. As Edmund Burke famously declared, “those who do not know history are destined to repeat it.”

Recent articles have taken a look at the past in order to discern the future. Two weeks ago the focus was on the economy and the odds of a double-dip recession. Despite the negative economic data and constant chatter over the possibility of another recession, historical data indicated the likelihood of such an event to be very low (a view the mainstream media is now recognizing).

Complete Story »]]>
SPYIVVVOODIAQQQSean HannonSeptember: Will the Markets Sizzle or Fizzle?http://seekingalpha.com/article/225253-september-will-the-markets-sizzle-or-fizzle?source=feed_author_sean_hannon
225253
Published in 1922, T.S. Eliot’s The Wasteland is considered one of the most important poems of the 20th century. Having become a touchstone of modern literature, the poem is best known for a few famous phrases. Among them are the opening line declaring “April is the cruelest month.”

Such a declaration may have suited Eliot’s artistic desires, but for investors April has been pleasant. From 1950 to 2009 (60 years) April is the third best month with the S&P 500 finishing higher 40 years with an average gain of 1.4%. For investors April is not the cruelest month. September is.

Over the past 60 years, September carries the worst average return (-0.8%) and the most negative months (34). More important than the number of negative finishes is that down years have often been brutal. Of the 34 years in which September registered a negative return, 15 years had losses of

Published in 1922, T.S. Eliot’s The Wasteland is considered one of the most important poems of the 20th century. Having become a touchstone of modern literature, the poem is best known for a few famous phrases. Among them are the opening line declaring “April is the cruelest month.”

Such a declaration may have suited Eliot’s artistic desires, but for investors April has been pleasant. From 1950 to 2009 (60 years) April is the third best month with the S&P 500 finishing higher 40 years with an average gain of 1.4%. For investors April is not the cruelest month. September is.

Over the past 60 years, September carries the worst average return (-0.8%) and the most negative months (34). More important than the number of negative finishes is that down years have often been brutal. Of the 34 years in which September registered a negative return, 15 years had losses of

Complete Story »]]>
SPYDIAQQQSean HannonDoubting the Double-Diphttp://seekingalpha.com/article/223844-doubting-the-double-dip?source=feed_author_sean_hannon
223844
We live in a never-ending news cycle. With hundreds of television stations supplemented by traditional media outlets and the ever expanding internet content, nearly every topic is dissected from countless perspectives. After all, with programming hours to fill and advertisers to satisfy, the pundits need something to discuss.

One topic which recently has attracted increasing attention is the talk about a double dip recession. Google Trends shows searches for the term “double dip” nearly seven times higher than when the stock market peaked in late April and over six times higher than the beginning of the year. With recent economic data indicating weakness a growing crowd declares a double-dip recession inevitable.

But is it? First, we should start with a definition. A double-dip recession occurs when gross domestic product (GDP) slides into negative territory after a few quarters of growth. In more general terms, we see a recession followed by

We live in a never-ending news cycle. With hundreds of television stations supplemented by traditional media outlets and the ever expanding internet content, nearly every topic is dissected from countless perspectives. After all, with programming hours to fill and advertisers to satisfy, the pundits need something to discuss.

One topic which recently has attracted increasing attention is the talk about a double dip recession. Google Trends shows searches for the term “double dip” nearly seven times higher than when the stock market peaked in late April and over six times higher than the beginning of the year. With recent economic data indicating weakness a growing crowd declares a double-dip recession inevitable.

But is it? First, we should start with a definition. A double-dip recession occurs when gross domestic product (GDP) slides into negative territory after a few quarters of growth. In more general terms, we see a recession followed by

Complete Story »]]>
SPYDIAQQQSean HannonMarket Outlook: Bearish Background to Bullish Storylinehttp://seekingalpha.com/article/209357-market-outlook-bearish-background-to-bullish-storyline?source=feed_author_sean_hannon
209357
The last two weekly market commentaries have discussed how the underlying trend of the market is now bearish and all rallies should be used to sell stocks and reduce risks. With nearly every news outlet spouting the bullish storyline, these articles served as an outline of a disciplined investment strategy. Those who followed the outline have done well as the Dow Jones Industrial Average (Dow), S&P 500, and NASDAQ each declined over 5% since my initial warning.

With the Dow still stuck below the psychologically important 10,000 level and all three major U.S. markets trading beneath their 200-day moving averages (MA), the bearish backdrop is clear. Even if many are still looking for a rally, we should understand that the primary trend is lower. Instead of focusing on how high prices will rally, we should instead consider how much further prices can fall.

The last two weekly market commentaries have discussed how the underlying trend of the market is now bearish and all rallies should be used to sell stocks and reduce risks. With nearly every news outlet spouting the bullish storyline, these articles served as an outline of a disciplined investment strategy. Those who followed the outline have done well as the Dow Jones Industrial Average (Dow), S&P 500, and NASDAQ each declined over 5% since my initial warning.

With the Dow still stuck below the psychologically important 10,000 level and all three major U.S. markets trading beneath their 200-day moving averages (MA), the bearish backdrop is clear. Even if many are still looking for a rally, we should understand that the primary trend is lower. Instead of focusing on how high prices will rally, we should instead consider how much further prices can fall.

Declaring a downside target in a bear

Complete Story »]]>
DIAQQQSPYSean HannonWatch the Moving Average Instead of CNBChttp://seekingalpha.com/article/206580-watch-the-moving-average-instead-of-cnbc?source=feed_author_sean_hannon
206580
Digital video recorders (DVR) are wonderful products. What started as a niche product with the launch of ReplayTV and TiVo at the 1998 Consumer Electronics Show in Las Vegas has become ubiquitous. Now included in most cable boxes, DVRs have revolutionized how we watch television.

A fan of the ability to skip commercials and pause live action, DVRs are also an excellent tool to judge market sentiment. Since we can catalog and saves shows, it is easy to compare opinions today with what dominated in the past.

Such a comparison entered my mind this past Thursday. After the Dow Jones Industrial Average (Dow) declined 376 points, the talking heads on CNBC expressed in near unanimity that the trend for the rest of the year was lower. As the Dow had crashed below the important 200-day moving average (MA), I tended to agree with the sentiment. However, a quick glance at

Digital video recorders (DVR) are wonderful products. What started as a niche product with the launch of ReplayTV and TiVo at the 1998 Consumer Electronics Show in Las Vegas has become ubiquitous. Now included in most cable boxes, DVRs have revolutionized how we watch television.

A fan of the ability to skip commercials and pause live action, DVRs are also an excellent tool to judge market sentiment. Since we can catalog and saves shows, it is easy to compare opinions today with what dominated in the past.

Such a comparison entered my mind this past Thursday. After the Dow Jones Industrial Average (Dow) declined 376 points, the talking heads on CNBC expressed in near unanimity that the trend for the rest of the year was lower. As the Dow had crashed below the important 200-day moving average (MA), I tended to agree with the sentiment. However, a quick glance at

Complete Story »]]>
DIAQQQSPYSean HannonWhy I'm Steering Clear of Baiduhttp://seekingalpha.com/article/205807-why-im-steering-clear-of-baidu?source=feed_author_sean_hannon
205807
In my weekly newsletter EPIC Insights, I aim to uncover solid companies selling at cheap prices. This search is often difficult, but it will uncover stocks that bewilder me. One example is Chinese search engine Baidu (NASDAQ:BIDU).

I know this comment will anger many and unleash calls questioning my sanity, but BIDU is among the most overvalued companies I have ever seen. Trolling investing blogs the past week, the true believers were shouting down anyone who questioned the wisdom of owning BIDU's shares. The familiar story of scalable business models and exponential growth reminded me of the dot-com bubble and crashing stocks.

Realizing that those who have owned the stock during its march higher have done wonderfully, I decided to crunch some numbers. Based on 2009 earnings per share of $0.63, BIDU trades for a P/E of 114. Assuming a 60% future growth rate, BIDU's current price discounts 10 years

In my weekly newsletter EPIC Insights, I aim to uncover solid companies selling at cheap prices. This search is often difficult, but it will uncover stocks that bewilder me. One example is Chinese search engine Baidu (NASDAQ:BIDU).

I know this comment will anger many and unleash calls questioning my sanity, but BIDU is among the most overvalued companies I have ever seen. Trolling investing blogs the past week, the true believers were shouting down anyone who questioned the wisdom of owning BIDU's shares. The familiar story of scalable business models and exponential growth reminded me of the dot-com bubble and crashing stocks.

Realizing that those who have owned the stock during its march higher have done wonderfully, I decided to crunch some numbers. Based on 2009 earnings per share of $0.63, BIDU trades for a P/E of 114. Assuming a 60% future growth rate, BIDU's current price discounts 10 years

Complete Story »]]>
BIDUSean HannonTrading an Emotion-Driven Markethttp://seekingalpha.com/article/205593-trading-an-emotion-driven-market?source=feed_author_sean_hannon
205593
Most people view themselves as rational decision makers, but few are consistent. Although most actions we take are based on careful decision making, it is difficult to filter external noise. Instead of confronting each event individually, perceptions are often swayed by outside factors. A house may be designed to provide shelter and comfort, but more people allow the size of the house next door to sway their opinion of their own home. By ignoring what their home should be and deciding to compete with the neighbors, emotions trigger irrational decisions.

The same problem applies to the stock market. Comparing daily and weekly price gains, most people ignore the raw data and allow recent events to influence their opinions. When the Dow Jones Industrial Average (Dow) crashed nearly 1,000 points on May 6, the television shows focused more on the bounce from the intra-day low than the fact that the Dow

Most people view themselves as rational decision makers, but few are consistent. Although most actions we take are based on careful decision making, it is difficult to filter external noise. Instead of confronting each event individually, perceptions are often swayed by outside factors. A house may be designed to provide shelter and comfort, but more people allow the size of the house next door to sway their opinion of their own home. By ignoring what their home should be and deciding to compete with the neighbors, emotions trigger irrational decisions.

The same problem applies to the stock market. Comparing daily and weekly price gains, most people ignore the raw data and allow recent events to influence their opinions. When the Dow Jones Industrial Average (Dow) crashed nearly 1,000 points on May 6, the television shows focused more on the bounce from the intra-day low than the fact that the Dow

Complete Story »]]>
SPYQQQDDAIFSean HannonOnce Again, Markets Rally on Government Rescuehttp://seekingalpha.com/article/204175-once-again-markets-rally-on-government-rescue?source=feed_author_sean_hannon
204175
Publishing my weekly newsletter on Sunday should offer some clear advantages. Normally, the weekend provides time for both inspection and preparation. Allowing the markets to settle, we can examine the week that was, analyze key events scheduled to occur over coming days, and create a strategy independent of the market's noise. Now is not a normal time.

Following a brutal week in which the Dow Jones Industrial Average (Dow) fell 5.7%, investors are shell-shocked. Sadly, the Dow was one of the better performers. Six months ago, I created the EPIC Index as a broad measure of stock market performance. With weightings in both Europe and emerging markets, EPIC fell 8.1% on the week and is now 5.7% lower on the year. Last week's pain was widespread and dramatic.

After the past four trading days, it would be nice if we could slowly exhale and plan for the upcoming trading week,

Publishing my weekly newsletter on Sunday should offer some clear advantages. Normally, the weekend provides time for both inspection and preparation. Allowing the markets to settle, we can examine the week that was, analyze key events scheduled to occur over coming days, and create a strategy independent of the market's noise. Now is not a normal time.

Following a brutal week in which the Dow Jones Industrial Average (Dow) fell 5.7%, investors are shell-shocked. Sadly, the Dow was one of the better performers. Six months ago, I created the EPIC Index as a broad measure of stock market performance. With weightings in both Europe and emerging markets, EPIC fell 8.1% on the week and is now 5.7% lower on the year. Last week's pain was widespread and dramatic.

After the past four trading days, it would be nice if we could slowly exhale and plan for the upcoming trading week,

Complete Story »]]>
DIAQQQSPYSean HannonWhy I Sold Dellhttp://seekingalpha.com/article/203669-why-i-sold-dell?source=feed_author_sean_hannon
203669
John Maynard Keynes (1883-1946) was a British economist whose ideas and theories are experiencing a revival. An advocate of interventionist economic policies, his ideas have been implemented across the globe as governments and central bankers attempt to halt the recession and create growth.

Not one to limit himself to economics, Keynes was also an active investor who often commented on markets. One of his most famous ideas is the belief that "markets can remain irrational a lot longer than you and I can remain solvent." While a catchy and true statement, equally profound is his concept of the beauty contest.

Keynes described a market by using an analogy of newspaper contest in which entrants are asked to choose the six "most beautiful" women from a collection of photographs. Those who picked the most popular faces would be eligible for a prize. Keynes felt the rationale way to solve this problem

John Maynard Keynes (1883-1946) was a British economist whose ideas and theories are experiencing a revival. An advocate of interventionist economic policies, his ideas have been implemented across the globe as governments and central bankers attempt to halt the recession and create growth.

Not one to limit himself to economics, Keynes was also an active investor who often commented on markets. One of his most famous ideas is the belief that "markets can remain irrational a lot longer than you and I can remain solvent." While a catchy and true statement, equally profound is his concept of the beauty contest.

Keynes described a market by using an analogy of newspaper contest in which entrants are asked to choose the six "most beautiful" women from a collection of photographs. Those who picked the most popular faces would be eligible for a prize. Keynes felt the rationale way to solve this problem

Complete Story »]]>
DELLSean HannonIs the Rally Over?http://seekingalpha.com/article/203366-is-the-rally-over?source=feed_author_sean_hannon
203366
Finance textbooks paint a picture of markets dominated by rational investors who mechanically minimize risks while maximizing returns. Those of us who trade each day know better. Although we monitor our risk and seek to maximize gains, individuals' emotions play a more prominent role than standard financial theory portrays.

When assessing people's emotions, so much depends not only on what is currently occurring, but also on what has happened in the recent past. Just as someone lightly jostled from a deep sleep will lose their bearings and believe a major event occurred, investors facing a sharp change in circumstances will think the market's backdrop dramatically shifted.

Consider the past two trading days. As the Dow Jones Industrial Average (Dow) has dropped 285 points over the past two sessions, pessimism emanates. While the drop has been broth brutal and broad, it is to be expected. From the market low on February

Finance textbooks paint a picture of markets dominated by rational investors who mechanically minimize risks while maximizing returns. Those of us who trade each day know better. Although we monitor our risk and seek to maximize gains, individuals' emotions play a more prominent role than standard financial theory portrays.

When assessing people's emotions, so much depends not only on what is currently occurring, but also on what has happened in the recent past. Just as someone lightly jostled from a deep sleep will lose their bearings and believe a major event occurred, investors facing a sharp change in circumstances will think the market's backdrop dramatically shifted.

Consider the past two trading days. As the Dow Jones Industrial Average (Dow) has dropped 285 points over the past two sessions, pessimism emanates. While the drop has been broth brutal and broad, it is to be expected. From the market low on February

Complete Story »]]>
DIAQQQSPYSean HannonWhy I've Never Trusted This Rallyhttp://seekingalpha.com/article/200783-why-ive-never-trusted-this-rally?source=feed_author_sean_hannon
200783
Investing can be very complex. Examining a series of different opportunities, pondering different scenarios, and determining which actions should be taken require a great deal of focus and thought. When a decision is reached, the last thing we want to do is spend hours explaining and rationalizing our actions. Instead, simple phrases and quick antidotes are developed.

For contrarian investors who prefer taking non-consensus views, one phrase almost always sits on their lips- "this time is different". While a simple and effective explanation, that phrase has led to more loss and heartache than any other four words. During the dot-com bubble, investors rushed into internet stocks with non-existent business models since anything on the web was sure to see exponential growth. Losses quickly followed as the old rules of revenue and income being needed to support a business had not been violated. Those who snapped up subprime mortgage REITs during

Investing can be very complex. Examining a series of different opportunities, pondering different scenarios, and determining which actions should be taken require a great deal of focus and thought. When a decision is reached, the last thing we want to do is spend hours explaining and rationalizing our actions. Instead, simple phrases and quick antidotes are developed.

For contrarian investors who prefer taking non-consensus views, one phrase almost always sits on their lips- "this time is different". While a simple and effective explanation, that phrase has led to more loss and heartache than any other four words. During the dot-com bubble, investors rushed into internet stocks with non-existent business models since anything on the web was sure to see exponential growth. Losses quickly followed as the old rules of revenue and income being needed to support a business had not been violated. Those who snapped up subprime mortgage REITs during